[Fabernovel study] New economy, new KPI: the customer era

New economy,
new KPIs:
The customer era.

Foreword.
y creating some disruption in value chains and favouring the emergence of new models, the digital
revolution has induced deep changes in the way value is created and shared. It is more and more
decorrelated from short term financial performance. That should push organizations and investors to
review their monitoring and valuation of innovative projects, as well as pay attention to the value of some
intangible assets, such as customer capital, talent capital, ecosystem, software or societal and
environmental impact.
Customer centricity was at the heart of the digital revolution, which explains why among these assets,
customer capital is the easiest to value by investors. However, if we’ve focused our analysis in this
presentation on this asset, this should not overshadow the other key levers that organizations need now
for their transformation to be more and more systemic.
Digital native economic models have been built by design according to an extra-financial approach with
monitoring and communication already focused on customer KPIs, and sometimes on talent or ecosystem
metrics. By contrast, if players other than digital natives have initiated a deep transformation of their
model, they have not yet adapted their reporting styles, even though this would enable them to better
allocate resources and value the customer acquisition strategy.
Combined with this document, we are launching a new index dedicated to testing your own maturity
regarding customer capital (how you’ve integrated this approach, how customer-centric your reporting is,
how you use it). Once this assessment has been completed, this presentation will help drive you along the
path towards a new reporting approach. Additionally, it will help you harness your organization's potential,
which we've identified at both the internal and external levels, while focusing on stakeholder engagement
and value creation levers.
B
Jean-Christophe Liaubet
Partner
at Fabernovel

What is this document?
This is a document dedicated to presenting
Fabernovel’s view on the new value creation
levers in the digital era and in particular on the
customer pillar: why it is a critical asset, how to
monitor it, assess it and optimize valuation. This
comes jointly with an index to assess one’s
company maturity on client capital.
Who should read it?
CEOs and C-level employees both from ﬁnancial
and digital/innovation teams, in order to spread
this new approach in the company and push
their teams to monitor and assess innovation
projects differently. Ideally, this approach should
be widely shared inside the company.
Customer-centric KPIs.
- Q1 2019 -
What can you expect to learn from it?
This document should give you a good
understanding of the customer lifecycle as well as
the KPI toolkit to monitor each of its step. It also
presents an overview of how mature digital players
and incumbents are on this type of reporting.
Finally, it intends to give you the keys to switch to
this approach, including a dedicated tool to assess
your own maturity.
Who wrote it?
Fabernovel’s teams of experts in the valuation of
innovation, some of whom were equity analysts for
10-15 years before joining Fabernovel, combining
expertise in both ﬁnance and digital innovation.

The digital revolution is a value revolution.
Investors increasingly
base their judgement on
optionality, which
is reflected on valuation
multiples. A company’s
biggest challenge then
becomes to crystallize
this optionality.
Rising share
of optionality
in valuation
The new economy is leading to massive value shifts driven by three simultaneous
trends.
The Emergence of new
models, changing
competitive
environments, evolving
sector boundaries...
Perspectives are
blurred.
The concept of “value”
needs to be
redefined: is it based
on the generation of
flows or on the
development of assets,
on usage value or on
financial value?
Value chain
disruption
New value
definition

Valuation is not always correlated to financial performance anymore.
Three trillion-dollar babies, each in its own way.
Microsoft’s
good earnings
and long-term vision
Apple’s
very high
profitability
Amazon’s
strategic vision
and exploratory DNA
Apple’s market cap exceeded
$1Tn last August after its
announcement of very
strong financial results and
high stock buybacks.
Microsoft’s market cap
appreciation came after
strong Q1 earning results,
primarily driven by its cloud
activity.
But it also came from
investors’ trust in Microsoft’s
vision, due to the belief that
Microsoft has a key role to play
Amazon’s market cap crossed the
$1Tn threshold in September 2018,
driven by growing valuation
multiples.
Investors were notably buying
Bezos’s strategic vision despite the
company’s low profits.
26x15x
$63Bn $39Bn
80x
$13Bn
$1Tn $1Tn$1Tn
Reached on 02/08/2018 Reached on 25/04/2019Reached on 04/09/2018
Market Cap
Net Income
P/E

New
patterns
of value
creation
Immobilism is costly
a lack of transformation
can be fatal
Think long-term
and accept a J-curve
Customer,
talent, ecosystem
3 critical assets & value levers
Vision &
Entrepreneurial culture
are key
New value models, new rules.

The need for a new valuation approach.
Innovation & new models raise the question of how to measure value.
*Source: Factset, as of August,8 2019
The digital revolution has brought uncertainty
regarding the definition and measure of value creation,
for investors as well as financial teams.
Current financial standards do not appear relevant enough
anymore to value innovation and new models, as some
unprofitable companies outperform on public markets.
User growth and employee engagement metrics can prevail over
financial performance...
For innovative projects, long term growth prospects appear to be
more attractive than short term profitability, showing the
necessity to take a whole new approach, no longer based on
financial restructuring and build-up, but rather on customer
retention, talent attractiveness, CSR impact, and ecosystem
diversity.
83%
2019 has seen the
highest percentage
of unprofitable IPOs:
$50Bb
$5Bn
Market Cap*
Net loss
Financial standards do not reflect companies’
value anymore.

Providing a 360° approach of value creation.
Some key intangible assets have become critical in companies’ valuation.
Valuation approach in the new economy needs to
integrate all drivers for value creation and provide
a 360° vision of businesses.
Different pillars of value creation need to be taken
into account in order to assess a company’s value
and growth sustainability:
Customers
Talents
Ecosystem
Social & environmental impact
Software
& other components speciﬁc to each company and industry
(governance, brand, culture, products and/or services etc.)
These pillars, complementary to ﬁnancial performance, enable
us to answer the question of how to value innovation.
Value
Creation
pillars
Customers
Talents
Ecosystem
Social &
environment
impact
Software

Regulatory push Stakeholder push
Several forces pushing in that direction.
Regulations as well as stakeholder concerns call for a more comprehensive approach.
The EU directive implemented in France (2017-1180
ordonance) replaces companies’
CSR reports with a compulsory “Extra-financial
performance declaration” *.
It takes into account 4 categories of information: social
impact, environment, human rights, and fighting
corruption.
The objective is to make extra-financial indicators an
integral component of a company’s reporting, and to
illustrate their “crucial role in a company’s
performance and activity”(Medef website).
* Applies to Public companies with > 500 employees and Revenue > €40m or
Balance sheet total > €20m ; to Private companies with > 500 employees and
Revenue or Balance sheet total > €100m
Investors are highlighting the rising importance of
non-financial criteria to assess a company’s value.
Customers’ concern for a company’s commitment
and purpose have encouraged corporates to focus
on components other than financials.
By reinforcing its social & environmental objectives,
MAIF has seen an improvement in its attractiveness
and in its customer loyalty, resulting in a €100m cut per
year in acquisition costs.

Thecustomerera Each era has created its own KPIs.
With digital revolution comes the customer era.
200s
Performance
grading of royal
family members
(China)
1800s
Daily performance of
employees (Scotland
manufactures)
1200s
First follow-up of
margins (Venice
merchants)
1930s
ROI & apparition of the
first dashboards
(France)
1990s
The Balanced Scorecard
evaluates financial &
non-financial
performance (US)
1910s
Taylorism introduces
the calculation of time
per movement (US
workers)
2015s
Digital revolution brings
out new customer-centric
players questioning
traditional KPIs
2018-2019
Amazon, the “customer
company”, is valued $1 trn
Customer approach
expands to take into
account all stakeholders
1970s
EBITDA is
introduced to
highlight cash flow
capacities (US)
2000s
Introduction of
ARPU
(Telecoms)
Productivity era
Stakeholder era
Finance era Customer era

Thecustomerera No more markets, only customers.
Looking at the new economy with different “glasses”.
Traditional Economy
Industrial economy, centered on products
New Economy
Usage economy, centered on customers
Vs
From markets...
Marketing mix (4P)
Competition on one offer
Market share
From a chain...
Added value
Value chain
Assets owner
Number of suppliers
From core business...
5-year plan
Growth & margin
Business portfolio
…to customers’ needs
User experience (4C)
Competition on one particular need
Usage share / Share of wallet
...to an ecosystem of partners
Circular value
Closed loop of value
Network orchestrator
Length of network & diversity of connections
...to mission statement
30-year vision, 6-month action plan
Customer Lifetime Value
Experience platform

Thecustomerera Shifting from product management to customer experience.
Revenue based on customer spendings vs products.
Revenue =
Unit price
x
number of
products
Revenue =
Revenue per
customer
x
number of
customers
Total
profit
Traditional management
Product
A
a
Margin A
+ +
Margin B Margin C
=
Customer
Segment A
Profit Seg. A
+
Profit Seg. B
Profit Seg. C
+
New management models
=
Product
B
Product
C
Customer
Segment B
Customer
Segment C

Customer centricity, the cornerstone of the new model’s success.Thecustomerera
Leverage the direct access to customers via customized offers leading to high engagement.
The Customer Is the Business Strategy.
Collecting and analyzing
exhaustive customer
metrics is a driver of
innovation, enabling
companies to experiment
and create new solutions,
services or products and
opening the path to
customization.
An innovation
catalyst
New players are building a
direct, disintermediated
relationship with their
customers, who are all the
more willing to complete
transactions when the
relationship is qualitative.
Their model is based on
economies of scale, which
leads to competitive prices.
The bigger the added
value for customers, the
better the network effect
for the brand. By building
a wide user base with a
high satisfaction rate,
new players gain more
attractivity and become
harder and harder to
challenge.
A strong
pathway to
revenue
Building high
entry barriers
“Leading with next-generation key performance indicators”
study, MIT Sloan Management Review x Google

Customer centricity
at the heart of winning strategies.
Thecustomerera

Selling subscriptions at a loss… or not!
The classical marketing & commercial approach has usually been to minimize
acquisition costs. But with Prime’s generous advantages (free and soon 1-day
delivery, streaming, etc.), Amazon is looking to maximize its margins by
investing in a growing base of customers spending more money more often,
and spending more time attached to the brand (rather than optimizing
costs).
Amazon.
Investing in its customer base to grow profits & improve performance.
Sources: worldwide figures from Amazon, Fortune, Fabernovel analysis, Beamer
[As of June. 2019]
+ Prime subscription ($120 yearly)
- Prime costs (Video & music content /
delivery cost)
An investment that pays off:
Amazon Prime
vs. $600
non-Prime
$1400Annual
spend per
member
Retention rate
after 1st year
After 2 years
93%
= Greater net short-term costs for
Prime
= Greater long-term profit for Prime
Thecustomerera
Customers Sellers
+ offer
+ service
+ business opportunities
+ purchases
+ customer data
+ revenue
+ products
+ competition (lower prices)
Prime
Video, Music
& Reading,
Free shipping etc.
+ customers
+ purchase
frequency
+ sellers
98%

I constantly remind our
employees to be afraid,
to wake up every morning
terriﬁed. Not of our
competition, but of
our customers.
Jeff Bezos

Amazon.
“An obsessive compulsive focus” on customers, the ﬁrst driver of success.
Amazon follows 500 KPIs internally in real time, of which 80% are customer centric.
Indeed, delivering optimal satisfaction comes from a good knowledge of users.
Thanks to these measures, Amazon has been ranked number 1 in the American Customer Satisfaction Index for 8
years.
1
Contact rate
(for each product)
The higher this rate is,
the lower the customer
satisfaction is.
2
Conversion rate
(by product category)
Enables performance
estimation of
recommendation
algorithms.
Thecustomerera
3
Loading time
(of homepage)
“A 0.1 second delay
in page rendering can
translate into a 1% drop in
customer activity”
Jeff Bezos
4
Delivery date
(of products)
% of purchases that are
delivered after the due
date
“We’re not satisﬁed
until its 0%”
Jeff Bezos

Netflix.
Leveraging customer knowledge to increase engagement and generate revenue.
75%
of the content
viewed on Netflix is
based on personal
recommendations.
Netflix captures data
corresponding to various
problematics
When is the user watching
the program? Where?
On which device?
When does the user pause or
switch off programs?
What do users research?
To better understand
users
by cross-referencing data and
identifying habits &
preferences
And drive strategic
choices
regarding content creation and
licence buyout to provide
better customized content
Relying on customer
centric metrics
House of Cards, a
data-driven production
Netflix relied on user data
showing their interests &
preferences to produce a
€100m TV serie and create
different trailers, each targeting
different customer segments.
A long-lasting growing revenue (in $m)
Thecustomerera
Netflix leverages customer data to draw a specific profile for each
user and design via complex algorithms a unique customized
catalogue of movies for each, which has been the base of the
strong customer experience, on which Netflix built its success.
In a context of increasing competition among streaming services,
and of Netflix subscribers growth slowdown in Q2, customer
centricity is all the more key to accentuate user engagement.

Accepting short-term losses to win the long-term race
Value is not systematically linked to financial profit. Spotify has convinced investors to accept to lose financial value in the short term,
in order to gain customer-related sustainability drivers (customer awareness, market share, loyalty, share of customer usage etc.).
In Q1 19, Spotify was the first music streaming company to reach the 100m paying subscribers milestone.
Spotify.
Customer asset as a driver of long-term sustainability, boosting company valuation.
Spotify EBITDA (€m) Number of Premium subscribers (millions) Spotify Sales (€m)
Enterprise value: €27.8 Md
High losses
Sources: company reports, Statista, Factset estimates
But an exponential customer value And growing revenues
A strategy leading to a high market valuation (as of Q2 19)
Thecustomerera
EV / paying user: €258 / subscription EV / sales: 4x

Slack.
Betting on customer experience to attract users and convert them into paying users.
Slack relies on a freemium offer to grow its paying user
base
Slack’s strategic bet has been to rely on a free offer to attract the most
customers. A free well-packaged and high-quality version of the solution is
accessible to all, and paying companies are only being charged for their
members that are actually active on the platform.
This strategy encourages teams to onboard as many active users as
possible, with limited barriers to entry.
Sources: “Slack, the future workplace”, by Fabernovel; Slack
Paying users / total
users ratio:
30% (Aug. 14)
39% (Feb. 18)
Slack then relies on its frictionless user experience (customization to
reﬂect one’s company culture, various services and apps) to encourages
users to switch from free use of Slack to paying accounts, and generate
revenue.
It has already proven its success with a paying users/total users ratio
growing impressively fast.
Thecustomerera
Slack - Daily active users

A recurring revenue model or market potential can be identified as drivers for valuation.
Neweconomy,newKPIs Some customer-centric companies benefit from a high premium.
The market long term
growth potential as
illustrated by Lyft & Uber
(new mobility) and Slack
(New work organizations)
The revenue model:
Subscription models such
as Slack and Netflix are
highly valued as it ensures
a longer relationship with
the customer while
advertising models such
as Twitter or Snap have a
lower EV/User.
Source: Factset, data as of 13/09/2019
Comparison of customer-centric companies’ EV/user. Two key drivers

Facebook
A stable empire
The biggest user base
(as of June 2019)
A very high ARPU
One of the highest thanks to
Facebook’s various offers and its
advertising revenue.
Facebook has the highest EV/User
among social media sector
(excluding Tencent that reaches
other sectors).
208$
2.4 bn
$29
Comparison of 3 social media leaders.
Snap
A young community
offering some opportunities
A decent number of users
but users who are not using the service
much often.
New growth opportunities
such as the implementation of video
games and new ﬁlters, boosting the user
base and the potential of increasing ARPU.
But an ARPU below sector average
Fewer interactions of the user base with
Snap lead to fewer revenues from
advertising.
48$
500m
$6.3
EV/User
No. of users
ARPU
Neweconomy,newKPIs Among the same sector, valuations can be quite different.
Twitter
Increasing the ARPU
of a stable user base
A smaller user base
of Monthly Active Users.
But a higher & increasing
ARPU
The company shows a high
EV/User due to its increasing
ARPU.
Twitter increased its Sales by
50% between 2017 and the end
of 2019, with almost the same
user base.
92$
336m
$8

Growth potential and visibility are critical for investors.
The future potential of
a company is its ability
to ﬁnd new levers of
growth (revenue
diversiﬁcation, new
offers) which allows
the company to
improve the previous 2
pillars (with new offers
comes new ARPU and
a higher magnetism)
Potential of
new territories
The capacity to give some insights on long term potential is key to engage them.
The ability to have an
elevated annual ARPU is
highly correlated to the
EV/User because it drives
a company’s revenue.
The magnetism of a
company is its ability to
acquire and maintain
its customer base
thanks to their offer
and targeted
marketing.
Monetization Magnetism
Neweconomy,newKPIs
We see the following components as central for the potential of long term value creation for business models.
It is key for valuation to engage investors on it. That is where the use of customer KPIs plays a major role.

The notion of customer goes beyond
the commercial transaction.
Thecustomerera

Thecustomerera In the digital economy, everyone is a customer.
New business models have redeﬁned the
customer concept, and make no difference
between paying customers & non-paying
ones.
Indeed, customer-centric companies strive to
deliver the best possible experience to everyone
to catch their attention and turn it into
commitment, and eventually into revenue…
whether or not a transaction
is made.
The scope of the customer notion brings
together all steps of the relationship with the
company, from being a visitor, to being a
non-paying user, and ﬁnally a paying one.
The customer scope
The customer scope goes from visitors to paying users.
Visitors
Anyone who pays special
attention to you.
Non Paying Users
Anyone who uses your
product/service but does
not complete a purchase.
Paying Users
Users who complete
a purchase.
Value Creation

Attract Engage Leverage
Awareness
Reach of the company
Retention
loyal & frequent users
Monetization
Generating revenue from
users (paying or non-paying)
Activation
Visitor commitment
(giving information…)
Acquisition
of visitors
Attention drawn
Conversion
Visitors become users
(paying or non-paying)
Thecustomerera The customer lifecycle, from attention to revenue.
Fueled by customer experience

The customer lifecycle, from attention to revenue.
(advertising, afﬁliation)
can measure their
non-paying customers
(users) and their paying
customers (advertisers).
Models based
on data
monetization
B2C freemium
models
B2B2C models
can measure their
paying customers
(companies) and their
(ﬁnal users: employees).
Thecustomerera
Depending on their business model, companies can measure paying
users, non-paying ones, or both.
can measure their
(users) and their paying
customers
(subscribers), analyzing
engagement &
monetization of each.

Thecustomerera Experience is at the heart of the relationship with customers.
Customer satisfaction must be the ultimate goal of customer experience.
Customer experience has been a key differentiating factor for successful new business models.
It relies on a few standards that have become a prerequisite:
Critical in the digital era, trust has emerged as one of the most crucial standards for customer experience.
A strong relationship of trust relies on user protection regarding privacy and/or safety, company’s ethics in terms of transparency
of information and power given to customers, and more generally on the quality of the value proposition solving a real need.
Indeed customers, and more generally stakeholders, penalize companies when trust is no longer respected : Facebook faced a
strong backlash after repeated data breaches, and Apple & Samsung were ﬁned by Italian antitrust authorities for their planned
obsolescence practices considered dishonest for users.
Efﬁciency
Gucci partnered with
Farfetch to launch F90: a
90mn delivery service of
any Gucci article.
Personalization
Spotify generates a unique
track curation for each user,
thanks to its AI algorithms.
Simplicity
Amazon offers additional services
to provide a seamless experience in
fashion: Prime Wardrobe (members
try before they buy) and Echo look
(clothing style analysis and
recommendations).
Trust
Qwant differentiated from
Google by insisting on user
protection, with its slogan “The
search engine which respects
your private life”.

Thecustomerera Experience is the backbone of customer value.
Delivering wow customer service to achieve a low churn.
Zappos invests in its ‘Customer Loyalty team’ to deliver a wow service, via an overstafﬁng that enables “breathing
space” for employees, in-depth training and a wide ﬂexibility regarding scripts and calls timing.
By focusing on its customer service, Zappos creates a strong emotional connection with customers, which has
proven successful in terms of acquisition and retention.
Experience lays the foundation to attract customers and engage them, in order to create
value.
Inversely, a better
knowledge of each step
of the customer path can
highlight potential areas
of improvement of the
customer experience.
A better
Customer
Experience
Attractiveness
Customer
Engagement
Monetization
Improves Optimizes
ZAPPOS (Acquired by Amazon in 2009)

How to assess & improve
customer value.
2

If you don’t measure it,
you can’t improve it.
Lord Kelvin

Assessing&improvingcustomervalue Evaluating each step of the customer lifecycle.
Measuring your customer centricity through each step of the customer path.
The framework to evaluate a company’s customer capital integrates
4 complementary key blocks of KPIs that retrace every aspect of the customer scope:
Attract Engage Leverage
Customer
Experience
Capacity to
acquire &
activate visitors
Capacity to convert
them into
customers &
engage them
Capacity to
monetize your
customers
Improves results
Rely on a seamless
and satisfying experience
The framework will reﬂect the maturity of one’s company on its customer centricity.

Attractiveness
is the first key phase in the
relationship to customers:
raising awareness and acquiring
new visitors. There is no
monetization at this stage thus
no direct impact on the P&L but
it will condition the rest of the
value chain.
Assessing&improvingcustomervalue Assessing attractiveness.
How well does the company manage to reach a wide audience?
How many new visitors does the company attract?
How well are they activated (from someone paying attention to someone who takes action)?
Attracting new visitors and activating them.
Awareness
Company marketing reach
Nb of followers on social media
Nb of views of content published
Nb of reactions (likes, claps..)
Nb of attendees to events
Nb of subscriptions to newsletters, clubs...
Brand/Product/service magnetism
Nb of brand/product/service mentions, researches
Brand knowledge(based on surveys & perception studies)
Rate of adoption of the product/solution
Viral coefficient
Acquisition of visitors
Nb of visitors (anyone who pays attention)
Nb of visits on the website/physical venue/First
contacts for business services
(Direct Traffic + indirect traffic, per channel)
Nb of single visitors (website, physical venue for
meetings): Gross adds, net adds, overall growth
Nb of customer requests about the product/service
Activation
Nb of accounts/sessions created
Nb of proposals or demos required
Nb of app downloads

Social MediaFinancial services & mobile
payment
Nb of visitors
App store ranking,
based on number of
downloads
Attract — Reporting use cases.
Magnetism & activation
KPI:
Reporting:
Tracking trafﬁc Reach
• As of March, Snapchat
reaches 90% of all 13-24
year-olds and 75% of all
13-34 year-olds in the U.S.
• Our audience watching
content on Discover every
day has grown over 35%
year-over-year.
Square Investor Presentation May 2019 Asos 2018 ﬁnancial report Snap 2019 Q1 & Q2 earnings
Online fashion retailer
Assessing&improvingcustomervalue
KPI:
Reporting:
Audience
Audience reach
KPI:
Reporting:

Engagement
will be critical regarding the
potential of revenue and value
creation driven by each
customer.
Once visitors engage with the
product/service, they become
users. Either paying or
non-paying users (ex : freemium
models) participate to create
value and impact the P&L,
directly or indirectly.
Assessing&improvingcustomervalue Assessing Engagement.
Converting visitors into users and retaining them.
Are visitors successfully converted into users?
Conversion
From visitors to users (Paying or non-paying)
Total nb of active users (Gross adds / Net adds/Total growth)
Conversion rate (from visitors to users (paying or non-paying)
Nb of contracts/ purchase/ membership abandonment; rebound
rate
From non-paying users
to paying users
Conversion rate
Do these users become loyal and committed to the company?
How many ﬁnal users, and how engaged are they?
Retention
Paying & non-paying users
Daily/monthly active users
Retention rate / Churn rate
Average lifespan of customers
% of returning customers
Usage : Nb of interactions/ average time
spent/visits; Nb of pages seen per session
Recurring users (paying)
Average time between service
contract renewals or purchases
Nb of recurring buyers
% recurring purchase or service
contracts (Nb of repeat
purchases/nb of total purchases)
Commitment
Nb of referrals &
sponsorships
Nb of new users drawn
by existing users
Final user data
Nb of ﬁnal users
Total, net adds, gross adds,
growth
Daily/monthly active users
User churn rate / retention rate /
nb of returning users
Usage
Nb of interactions/ average time spent/visits;
Nb of pages seen per session
Frequency of usage
Average lifespan of users

Engage — Reporting use cases.Assessing&improvingcustomervalueAssessing&improvingcustomervalue
Telecom operatorFashion e-commerce company
Active users
Paying users
Conversion rate of ﬁrst-time
buyer into repeat buyer
From members to
repeat buyers
KPI
Reporting
Users Retention of customers
Showroomprive 2018 results presentation SurveyMonkey yearly report 2018 VodafoneZiggo Presentation, March 2019
Online surveys solution
KPI
Reporting
Churn rate
Net adds
KPI
Reporting

Assessing&improvingcustomervalue Assessing Leverage.
Monetizing customers and maximizing value.
Leveraging
means monetizing.
By evaluating customers’
(including both visitors and
users) impact on P&L, value
creation can be quantiﬁed,
monitored and optimized.
What revenue is drawn directly from paying & non-paying users?
Customer revenue
Direct revenue (paying users)
Total & average revenue per customer
% revenue from high value customer
% revenue from repeat customers
ARR per customer
ARPCO
Upsell & cross-sell rate
RGU
Average basket value size, GMV, Nb of orders per customer
Indirect revenue (Non paying user)
Total revenue per user
ARPU
FCF per user
ARR per user
What are the costs for each user?
What is the overall value generated by each user?
Customer costs
Paying users
CAC* (blended, paid)
Fulﬁllment cost ratio
Marketing costs (channels costs,
Pay-per-click costs...)
Non paying users costs (if applicable)
User acquisition cost / Marketing costs
Customer value creation
EV/customer
CLV (per customer or per cohort)
Contribution margin per customer
Content created by customers
Cash impact
FCF per customer
Poor debt status / Payment delays

Leverage — Reporting use cases.Assessing&improvingcustomervalueAssessing&improvingcustomervalue
E-commerce companySocial media
Customer Acquisition Cost
Average Revenue Per User
(ARPU), worldwide & per
region
From members to
repeat buyers
KPI:
Reporting:
Facebook - Q2 2019 Results HelloFresh - Capital Markets Day 2018 Zalando Q2 2019 earnings
Meal kit delivery service
KPI:
Reporting:
Average orders/basket
size/GMV per active customer
KPI:
Reporting:

Assessing&improvingcustomervalue Assessing Experience.
Providing a qualitative experience to maximize satisfaction.
Customer experience
is a key enabler in the customer
relation and will drive a
company’s ability to optimize its
centricity and generate the best
value from it. Today, most
companies limit their attention to
NPS or customer service
indicators: they need to push
their analysis beyond.
How well does the company know and adapt to its customers?
Personalization
Knowledge of customers
Customer habits & preference metrics
Customer proﬁle
Curation
Amount of dedicated content
Amount of customized products or services
Level of anticipation of choices and needs
Singularity & differentiation of the experience
How qualitative and seamless is the experience provided to customers?
How positively do customers evaluate their global experience?
Quality of experience
Simplicity
Frictionless experience :
Ergonomy of the digital or
physical venue (app & website
loading time) and of the
customer path
Additional services :
Free trials, return policies
Efﬁciency
Customer relation :
First contact resolution and % of
resolved issues ; delay of answers
and problem resolution time
Delivery & delay time
Initial training time of employees
Trust
User protection:
safety of the
product/solution, data,
privacy
Ethics : responsibility of the
company, respectful
business practices
Satisfaction
Overall satisfaction
Product or service ranking
Nb of cancelled orders
Customer Satisfaction rate/score (CSAT) ; NPS
Social sentiment (% of positive reaction,
positive vocabulary)
Experience satisfaction
Customer Effort Score, Customer experience
index (Forrester), System usability scale
Level of emotion generated by the experience
(Net Emotion Score)

Experience — Reporting use cases.Assessing&improvingcustomervalueAssessing&improvingcustomervalue
Meal kit delivery serviceE-commerce conglomerate
Customer Acquisition Cost
Average Revenue Per User
(ARPU), worldwide & per
region
From members
to repeat buyers
KPI:
Reporting:
Alibaba - Investor Day 2018 Europcar Mobility Group 2019 Capital Markets Day Blue Apron - Investor Presentation (Q3 18)
Rental & mobility company
KPI:
Reporting:
Average orders/basket
size/GMV per active customer
KPI:
Reporting:

Where do companies stand
today?
Main trends & reporting practices.
3

Wheredocompaniesstandtoday? A lack of homogeneity in the customer-centric approach.
General overview of CAC 40 companies
compared to a panel of large digital natives
(GAFAM, social media, e-commerce)
Deep dive on a sample of 35 various B2C
companies, both digital natives and traditional,
among a diversity of sectors: Insurance, Banking,
Social media, Streaming, Mobility, Leisure, Video
games, E-commerce, Retail, Food Tech, Telecoms,
Energy.
Mostly based on external reporting
(2018-2019 results publications, press releases)
With insights on internal reporting
practices (Corporate blogs, research articles, white
papers, interviews).
Benchmark methodology: Collection &
classiﬁcation of customer-centric KPIs
In our study led about several French and international companies, two main trends emerged.
In general, companies tend to report metrics related to all
steps of the customer lifecycle (attractivity, engagement,
leverage, experience)
With a slight focus on customer engagement.
A variety of KPIs
Customer-centric reporting practices still vary highly
between digital players and more historical ones
Digital native companies were created with a stakeholder
centric approach, and a monitoring/communication focused
on customer KPIs from the beginning. However, even if
other companies have initiated a deep transformation of
their organization, hardly any of them have really
switched to a new reporting approach yet.
A gap in reporting practices
Incumbents have not switched to a new reporting approach yet.

Average number of
customer KPIs reported
By digital native
companies
5.2
By CAC 40
companies
1.7
Wheredocompaniesstandtoday? Digital native companies leading on customer-centric reporting.
Different models, different practices.
Customer-centric external reporting appears to be a standard for “digital native” companies (Tech giants in
e-commerce, social media, streaming…). However, it remains less common among incumbents, except for a few
pioneering sectors like Telecoms.
Communicate
on at least one
customer KPI
Number of customers
Satisfaction metrics (mostly NPS)
Main KPIs
CAC 40 external reporting “Digital natives” external reporting
0%
Have external
reporting mainly
focused on
customer metrics
60%
Such a gap can be explained by an uneven access to the customer, different models
and cultures and the difﬁculties encountered to change an historically different
approach as well as the legacy business.
Communicate
on at least one
customer KPI
Number of customers & growth
Number of active customers ARPU
Main KPIs
50%
Have external
reporting mainly
focused on
customer metrics
90%
Overview of CAC 40 companies & a panel of 10 large “digital natives” :

Areas of focus 25% of companies communicate on all 4 categories of KPIs
Wheredocompaniesstandtoday? Companies focus on different aspects of the customer scope.
94% of companies included
in the benchmark report at
least one metric related to
Engage.
Companies report KPIs related to all categories, with a slight focus on engagement.
A variety of KPIs reported
Repartition of KPIs collected
Number of customers:
Reported by
53%
of benchmark’s companies
Active customers:
25%
Total & average
revenue per user:
Reported by
33%
of benchmark’s companies
Most reported KPIs
Experience.
Leverage.
Attract.
Deep dive on a panel of thirty-ﬁve B2C companies with various industries and nationalities:
Leverage
28%
Engage
35%
Attract
14%
Experience
23%
Number of orders
per customer:
25%
Customer proﬁle:
25%

And for you?
The path to customer KPI reporting.
4

Selecting
the right KPIs
1
The path to customer-centric reporting.ThepathtocustomerKPIreporting
A three-step plan to integrate customer KPIs into your reporting.
Harnessing
your KPIs
Internally
& externally
3
Implementing
your KPIs
2

ThepathtocustomerKPIreporting Selecting the right KPIs
For each company its own KPIs, adapted to its specific needs.
A few examples of OMTM (one metric that matters)
OMTM: Time between the 1st
& 2nd
connexion
Strategic customer KPIs
driving your financial
performance
Focus on adequate KPIS
providing actionable
insights on your long-term
financial performance.
“The one metric
that matters”
Focus on the one metric
that is most critical for your
performance and that can
be followed over time.
Selecting the
relevant metric
Temporality
(can be contextualized)
Rate/Ratio
(comparable)
Intelligible
(easily understandable)
Decision-oriented
(actionable)
OMTM: Nb of friends added in the 10 days after
inscription

ThepathtocustomerKPIreporting Implementing your KPIs.
A progressive process for a long-term approach.
Complementary approach
Customer-centric reporting does not replace traditional financial indicators; it
brings complementary information in order to improve value creation.
Starting internally
To set sustainable customer-centric reporting, start by following & monitoring
these KPIs internally before communicating externally on it.
Engaging your teams
CEO, CFO, COO, Operational teams, Unit managers etc. need to be familiarized with
this new approach.
Setting up tools & guidelines to reach goals
Set specific objectives to be reached for every step of the way, tools (automated
data tracking etc.), and a timeline of follow-up.
Defining your level of action, depending on your maturity on customer
approach
Collecting customer data, analyzing to extract information, and/or leveraging data
to engage actions.

To optimize
resource allocation
To segment
customers and identify
new customer needs to
launch new offers
To monitor
company’s performance
ThepathtocustomerKPIreporting Harnessing your KPIs internally.
Setting the internal purpose of your follow-up.
Leveraging your KPIs internally:
Who ?
Teams: Executives, Management, Operationals
To monetize
customer data to third
parties

ThepathtocustomerKPIreporting Nike: using Customer Lifetime Value to optimize resource allocation.
Selecting and implementing CLV to better forecast customer value.
Visitors / paying or non
paying users
ARPU (Direct & Indirect revenue)
Costs/customer (production, service…)
Number of
customers
Proﬁt
per customer (PPC)
Customer
lifespan (n)
CAC (Marketing,
advertising, promotions …)
Acquisition
cost
1 / ( 1 - retention rate)
Σk=1
n
PPCk
(1 + WACC) k
- CACCLV =
Early 2018
Nike acquires Zodiac
(consumer data analytics)
to helps calculate CLV.
In 2017
Nike launches “Consumer Direct
Offense” plan to improve direct
customer relation
The results
Better understanding of the
value of an individual customer
enabled them to boost revenue
and retention, with the right
marketing, recommendations
and offers.
Customer Lifetime Valuation $Bn

ThepathtocustomerKPIreporting Harnessing your KPIs externally.
Setting the external purpose of your follow-up.
To measure
your impact
To value
your customer asset
and strategy
To educate
on your model
Building on your KPIS externally :
Who ?
Stakeholders: Investors, Partners, Customers, Media, Regulators

Twitter: valorizing customer capital to ﬁnancial markets.
+ 10%
Stock price
User acquisition KPI positively inﬂuences market reaction after disappointing
forecasts.
In the publication of its 2019 Q2
earnings, Twitter published a
guidance adjusted downwards,
with revenue growth expected
to slow down and a
disappointing forecast.
And yet, the company’s market
cap has been up following the
publication of its quarterly
results, driven by a better user
acquisition growth which has
pushed investors to focus on
mid-term potential.
+ 5 million
Daily active users
ThepathtocustomerKPIreporting
Source : MarketWatch, July 26

The KPI toolbox for starters.
A few elements to begin with:
New customer concerns and
interests in social &
environmental issues impact
the customer-business
relationship.
Customers loyalty is now related
to the company’s external
commitment.
Stakeholders centricity soon to
be integrated as a driver of
customer value ?
The next move
/ Direct traffic
/ Conversion rate
/ Nb of active users
/ Churn rate
/ Recurring users
/ ARPU
/ CAC
/ CLV
/ NPS
/ Customer habits
specific to each company
Customer experience has been
crucial for the success of new
business models.
It is key to gather experience KPIs on
every step of the customer journey
and to set specific objectives for each
step.
Offering the best experience tailored
on customer’s specific needs must be
an all-time preoccupation.
The must
haves
The
underrated
game changer
Going further : Download Fabernovel data mapping toolkit

Evaluate the level
of maturity of your
customer approach.
And you, how
customer-centric
are you ?
Click here for an
overview of the index !
To access the full version of the index, you can contact us at : axelle.ricour-dumas@fabernovel.com

Jean-Christophe Liaubet
Partner
Jean-Christophe joined Fabernovel
in 2017 as a Partner and founder of
the valuation practice of the Group.
With over 20 years of experience
as an Equity Analyst and then
Managing Director at Exane BNP
Paribas, he helps corporates make
and value the best investment
decisions.
Gabrielle Peyrelongue
Value analyst
Graduate from ESSEC, Gabrielle
joined Fabernovel in 2018 as a Value
Analyst.
She has worked within Fabernovel
practices in Paris and San Francisco,
focusing on several projects
including innovation strategy and
new models
of valuation based on extra financial
criteria.
Axelle Ricour-Dumas
Value Director
Axelle joined Fabernovel in 2018 as
a Director, after 20 years as Equity
analyst at Cheuvreux, Director of
Investor Relations at IPSOS and
Founder of her company,
MYFINADVICE.
At Fabernovel, she works on
several projects of strategic
advisory, and has a strong
expertise on the assessment and
scoring of strategic projects.
Jérémy Taïeb
Quantitative analyst
Jérémy joined Fabernovel as a
quantitative analyst, after
graduating from CentraleSupelec
and ESCP Europe.
He specializes in quantitative
finance and data analysis,
especially for tech companies, and
works on several projects including
financial research, financial
modelling and ecosystem
modelling.
Authors.Credits

Annexes KPIs glossary.
ARPCO
Average Revenue Per Convergent Offer
ARPU (Average Revenue Per User)
total of revenues/total users
ARR
Annual Recurring Revenue
Avg. lifespan of customer (in months)
1/monthly churn
Cohort analysis
analysis based on consumers/users fragmentation
Customer acquisition cost
total acquisition campaign costs/number of new
customers (CLV/CAC ratio)
Customer concentration
biggest customer revenue/total revenue
Customer Effort Score
measures satisfaction regarding the effort through
customer journey
Contribution margin
selling price per unit minus the variable cost per unit
LTV or CLV / Customer lifetime value
ARPU x 1/CLV attrition rate Can also be based on FCF,
margins...
DMT (Durée Moyenne de Traitement)
average processing time
First Call Resolution
first call resolution rate, reflects customer service
performance
Fulfillment Cost Ratio
Fulfillment cost (Cost of sales & distribution:
logistic, content, creation, services, payments)/revenue
GMV (Gross Merchandise Value)
average nb of orders per customer x average basket size
(after returns)
Marketing Cost Ratio
marketing costs/revenue
Net adds
new subscribers or customers - nb of unsubscribing
Net Promoter Score
% brand ambassadors - % brand detractors

Annexes KPIs glossary.
Network effect
the more a product is used, the more its value increases
(ex : Facebook), each company has its own KPIs to assess
it
Problem Resolution time
(Sum of All Interactions for Total Resolved Issues - Total nb
of Resolved Issues)
RGUs
Revenue Generating Units (a customer can represent
various RGUs: for example when subscribing to a mobile
phone contract + TV contract + internet → the customer
represents 3 RGUs)
Trafﬁc sources
direct, organic…
Conversion rate
pace at which the solution/product/service has been
adopted
Rebound rate
customers leaving site without a chance to convert them
% repeat purchase
Nb of repeat purchase/nb of total purchases
Requests rate with low/high level of added value
simple/recurring customer service requests rate vs.
complex ones
Retention rate
(Nb of Customers at End of Period - nb of New Customers
Acquired During Period)/nb of Customers at Start of
Period
Virality
speed of product/service spread, can be measured by
k-value (average nb of invitations sent by each
user*conversion rate of invitations into new users)

Annexes Companies analyzed in the benchmark.
/ Facebook
/ HelloFresh
/ Netﬂix
/ Orange
/ PSA
/ Showroomprive
/ Snap
/ Spotify
/ Square
/ Takeway.com
/ Twitch
/ Twitter
/ Ubisoft
/ Vodafone
/ WeChat
/ Zalando
/ Zynga
/ Activision Blizzard
/ Airbnb
/ AirFrance
/ Alibaba
/ Allianz
/ Amazon
/ Asos
/ Axa
/ Baidu
/ Blablacar
/ Blue Apron
/ BNP
/ Carrefour
/ Crédit Agricole
/ Easyjet
/ EDF
/ Engie
/ Europcar Mobility Group

Thank you
CONTACT
Jean-Christophe LIAUBET
Partner
+33 6 08 86 24 88
jean-christophe.liaubet@Fabernovel.com

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